Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to invest in a range of small-cap companies because of their great growth potential, the Vanguard Small Cap ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The small-cap ETF's expense ratio -- its annual fee -- is a very low 0.17%.
This ETF has performed reasonably well, but it's also very young, with just a few years on the books. It outperformed the S&P 500, on average, over the past three and five years. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
What's in it?
Plenty of small-cap companies had strong performances over the past year. BioMarin Pharmaceutical
Other companies didn't do as well last year, but they could see their fortunes change in years to come. Senior Housing Properties Trust
The big picture
Small-cap stocks can add diversity and some great growth potential to your portfolio. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.